The Reserve Bank of Australia or RBA increased cash rate again to 2.85% with a 25 basis point. How will this affect your monthly mortgage repayments, and is there any chance that the rake hike will stop before this year ends?
Since May, the Board has significantly raised interest rates due to Australia's rising inflation. This was required to create a more stable balance between supply and demand in the Australian economy and help reduce inflation closer to the target.
According to Governor Lowe, "Incoming data and the Board's assessment of the forecast for inflation and the labour market will continue to decide the amount and timing of future interest rate hikes."
"The board remained committed to its goal to bring inflation back to target and will take whatever actions are necessary to do so." (source: rba.gov.au)
As a result of the RBA's decision to raise the official cash rate, your monthly mortgage repayments will also increase.
Unless you have a fixed-rate mortgage, your repayments won't rise. However, if you are on a variable home loan, the banks will follow the RBA's lead and raise your interest rate.
This means that, for example, on a $300,000 loan over 30 years, mortgage holders will see an increase of around $16 in their monthly repayments.
The good news is that most economists think the majority of rate increases have already been made and may end as early as next month.
Commbank predicts a one-rate increase, with a top of 3.10 per cent in December 2022. In March 2023, NAB forecasted three hikes totalling 3.60%. According to Westpac, there will be a further increase of 3.85% in March 2023. Lastly, ANZ predicts a 3.85% increase in May 2023.
If you're worried about rising interest rates, you're not alone. Many homeowners are feeling the pinch as rates continue to climb. But there's no need to panic. Our Mortgage Broker in Melbourne can help you navigate these waters and find a loan that works for you.
Our team of experts is here to help you understand your options and find a loan that fits your needs. We'll work with you to find a rate that won't break the bank and do everything we can to ensure you're comfortable with your new loan.
Schedule a call with us today if you're ready to explore your options. We'll be happy to answer any questions you have and get you started on the path to a new loan.